Please use this identifier to cite or link to this item:

Measuring investment opportunities using financial statement text

File Size Format  
HARC_2019_paper_198.pdf 528.74 kB Adobe PDF View/Open

Item Summary

Title:Measuring investment opportunities using financial statement text
Authors:Basu, Sudipta
Ma, Xinjie
Tran, Hoa
Keywords:Investment opportunities
textual analysis
Tobin’s Q
corporate policies
show 1 morelasso
show less
Date Issued:01 Sep 2018
Abstract:We analyze 10-K texts from EDGAR during 1995-2009 to score firms’ investment opportunity sets on multiple dimensions. We identify 646 unique key words that predict future investments and group them into 62 factors. Industry-specific factors include Bio-Pharmaceutical, Banking, Information Technology, Oil & Gas and Semi-conductor, while more general factors include Impairment, Debt Intensity, Executive Employment, Preferred Stock Buyback and Capital Seeking. Our multi-dimensional measures of firms’ investment opportunities outperform Tobin’s Q and/or industry-fixed effects, in predicting out-of-sample future (2010-15) investments and related corporate policies, and even inform incrementally over lagged dependent variables.
Appears in Collections: 11 Financial: Disclosure

Please email if you need this content in ADA-compliant format.

Items in ScholarSpace are protected by copyright, with all rights reserved, unless otherwise indicated.